Last Updated on April 14, 2024 by Maryam Siddiqui
Portugal isn’t famous only because of the pretty beaches and nice weather. Experts from around the world point to the country as a land of opportunity. An opportunity to upgrade your lifestyle and an opportunity to make more money. There are 3 types of investments in Portugal that foreigners are cashing on.
But what types of investments are on the rise in Portugal? Which ones are more profitable with less risk? How long could it take for you to see any return on investment? We’ve got you covered.
Take a look at our tips for investing well in Portugal from the point of view of analysts and expats. This article will help guide you on what the market looks like, why people are investing, and what lies ahead. Follow up!
3 Types Of Investments In Portugal
Portugal is in vogue. The southern European country overcame the 2008 crisis, stabilized, and is increasingly attractive. Everybody wants to go to Portugal, and people want to explore how they can invest in the market here.
In this article, we will analyze some investment opportunities in Portugal that are not associated with granting a visa but with the capital return itself. According to experts, the top 3 types of investments in Portugal are as follows:
- Real Estate Investment
- Capital Investment
- Investment In A Technology-Related Business
Of course, a good investment must be accompanied by caution and knowledge of the market. Therefore, follow the article to learn more about each of the types of investments in Portugal.
Before we begin talking about all the options, we must add that you may or may not find their options suitable for your specific plan. And, of course, that’s okay. Investing in Portugal or anywhere else requires deep consideration and proper analysis.
We do recommend that you do extensive research and weigh all your options before making the final decision. If you’re looking to talk to experts, Viv Europe is here to help every step of the way.
Investment in Real Estate
When investing capital, specifically in a foreign country, many questions may arise about how to gain access to the country’s main opportunities.
Should you go for real estate or develop a company?
Real estate investments are certainly the most popular choice among foreigners in Portugal. That’s because people get attractive returns on the many kinds of investments they can make here.
The first step is to know what properties are available to invest in, how much they cost, and the procedure to obtain them. Once you have the basic information, it’s time to narrow down your options and see what you can do with them.
Then, the investor will have to purchase a property in Portugal to be able to lease or wait for its valuation. There is a timeframe that must be respected.
In recent years, the value of properties has nearly doubled in many areas of Portugal. That in itself is a huge motivator for real estate investors.
But with this information, it’s important to add that the real estate market is absolutely crazy, especially in 2024. Although there are many new investments taking place to support the tourism sector, the availability of residential properties is becoming more scarce.
In addition to this, the Portugal Golden Visa investment also no longer supports real estate investments.
Before this law changed in 2023, real estate investments were the most popular investment choice to qualify for the Golden Visa in half a million euros.
Don’t worry! The Portugal Golden Visa is still as popular as ever! Different options are available to qualify for the visa application that grants citizenship by investment in Portugal.
Keep reading to learn more about the Golden Visa process if you’re interested!
Why Invest In Real Estate In Portugal
When it comes to rental activities:
- Low cost: In Portugal, condominium fees are very cheap or non-existent in most buildings.
- Variety of use: The possibility to rent properties through online rental services such as Airbnb and Booking has become the practice in many cities.
- Tax: Portugal allows the use of the simplified system (presumed profit) for the payment of income tax from short-term rentals.
- Economy: Stable economy and support from the European Community.
When it comes to real estate valuation:
- Demand: Due to the arrival of people from all over the world (including investors), the number of properties available is much smaller than that of those who want to buy.
- Cities development: with cities growing due to the arrival of new companies, the construction of shopping malls, etc., the price of real estate will increase at the same level.
- Realistic potential: Investors see the realistic potential of the real estate and tourism sectors.
Therefore, investing in real estate in Portugal seems more profitable and beneficial if well-planned.
According to Fipezap, Portugal has the best return rate for residential rentals per year. That’s ahead of Denmark, Cyprus, Brazil, Belgium, and Luxembourg.
If you want to check everything you need to buy a property in Portugal, read our article Complete Guide to the Real Estate market in Portugal.
Capital Transfer Investment
Besides the Real Estate investments, we have the bank investment options. These are more popular among people who like to stay away from the real estate sector and prefer to put money in bank account, venture capital funds, investment funds, stocks, and such.
Venture Capital Fund
Let’s break it down so it’s easier to understand. Venture capital funds are a type of private equity that pools money from investors to finance early stage startups until they reach a substantial size.
These funds play an important role for ventures for the next stage of their innovation life cycle. The finances are essentially invested in a company’s infrastructure that helps the business grow its operations, marketing, sales, and the following activities.
Now, coming back to why this type of investment is popular in Portugal.
Compared to other investment options for the Golden Visa, such as capital transfers to a bank or donation to scientific research, investment in venture capital funds is secure and adds potential earnings.
The biggest advantage of venture capital funds, or private equity funds, is that they have a minimum investment of €500,000. On the other hand, capital transfers to a bank have a minimum investment of double the amount.
The process is also much more hassle-free, has lower fees and taxes, diversifies the investor’s portfolio, and lessens the burden of managing the money yourself.
Investment Fund
Investments Funds are similar to Venture Capital Funds, but they have a broader investment mandate. They’re also referred to as mutual funds or hedge funds. And the asset classes can include stocks, bonds, commodities, and real estate.
The level of risk ranges from low to high, depending on the specific investment strategy of the fund. And they generate returns through capital appreciation, dividends, or interest income. The fund must be approved and regulated by the CMVM, the Portuguese Securities Market Commission. This entity regulates and supervises the financial instruments market and the agents that operate in it.
If you invest in a Golden Visa fund, you don’t have to manage them yourself, as numerous asset management companies are experienced and well-reputed, like Holborn Assets and Oxy Capital, our official partners.
The investor has to buy fund units for a minimum investment amount of €500,000.
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How much can you profit by investing in a fund managed by the bank?
Portugal is known for its low interest rate, which favors those who want to take out a bank loan.
On the other hand, if you “lend” (invest) your money to the bank, the return will not be great compared to other European banks.
If investing in a bank doesn’t seem profitable, we can’t say the same about private funds. Mainly real estate, and why is that?
As these assets are associated with the development of the real estate market (the buying and selling of properties), and considering that, despite the COVID crisis, these transactions continue occurring regularly, this type of investment can be rewarding.
“The funds can present an average return of 2.8% (0.6% in 3 years). The income accumulated in these funds, also called capitalization, is included in the value of the unit, increasing its value.”
As reported on Jornal de Negócios
As an example, Imopoupança, a real estate fund managed by BPI, had an average return of 7.2% per year.
Technology-Related Business Investment
Portugal is one of the European countries that has been gaining notoriety for the way it is creating policies aimed at attracting companies from the technological field.
In this sense, Portugal has developed some technological hubs, mainly in the Lisbon area, to attract companies from all over the world.
Besides that, many incubators are currently operating in Portugal and, therefore, receiving and developing Startups aimed to be Portugal’s next big tech thing.
That is why Portugal came to create a new type of visa, the Startup Visa, which aims to attract promising Startup companies to develop in Portugal and, thus, in the medium term, generate benefits for this country.
Expenses to consider with a business in Portugal
There are certain costs associated with the development of a company in Portugal, such as:
- Employees
- Acquisition of raw material
- Logistics
- Acquisition or lease of property
- Hiring an accounting service
- Payment of registration fees
- Purchase of machinery
- Marketing activities
Despite that, this country can become a gold mine for entrepreneurs. Especially considering that Portugal still has many business opportunities for investors to explore. Such as the tech field, but also many services-based activities like transportation and international food and delivery.
Why is Portugal attracting so many expats?
As we have discussed before, expats from all over the world who are looking to settle in a European country consider Portugal as one of the best options.
The reasons are many, among them:
- Idyllic climate
- Delicious cuisine
- High-quality standard of living
- Low-cost living
- Mesmerizing landscapes
- Beautiful beaches
In addition to all the fascinating attractions, Portugal is known as a new pole for startups. It is becoming a star for business-makers worldwide. With an ideal location, outstanding coworking spaces for digital nomads, and a low cost of living, there are many reasons why expats love it here!
That is why entrepreneurs and businesspeople seek to invest more closely in Portugal than in other European countries.
Not only is it cheap to live here, but it is also an excellent choice to invest in the Top 5 Cheapest Areas To Buy Property In Portugal and watch your asset valuation grow.
Extra Benefits Of Investing In The Country
To start a business or invest in Portugal, you don’t even need to have a residency in Portugal. That’s because the Tax Registration Number (NIF) can be obtained remotely.
Even though, if possible, we highly suggest obtaining the Portugal resident permit through a visa procedure. After all, it comes with benefits, such as:
- Freedom to travel throughout the EU countries
- The facilities related to running a business, working, and studying in any of the EU countries
- Access to education and healthcare throughout the EU
- The attractive tax regime for residents
Even if you’re not eligible to apply for a visa, you can always acquire a resident permit through the Golden Visa procedure.
Portugal Golden Visa Program
The Portugal Citizenship by Investment Program, also more commonly known as the Golden Visa program, has been on investors’ radar for a while!
Over the years, this program has helped Portugal’s economy strengthen and allowed it to invest in the right industries. Overseas investors interested in a diverse portfolio were able to put their money to work while waiting to receive the Portuguese Citizenship after 5 years.
The Portugal Golden Visa investment offers many benefits to anyone who obtains it, such as:
- Living and working in Portugal
- Free movement through the Schengen area countries, without the need for a visa.
- Possibility of extending benefits to family members through the Family Reunification procedure.
- The possibility to apply for a Permanent Residence authorization after 5 years of investment.
- Possibility to apply for Portuguese nationality after 5 years in a regular situation in Portugal.
What type of investment would you like to do?
There are, in fact, many areas to invest in Portugal, especially if we take into account the strength of doing business in the whole European Union.
Real estate, capital, and business are just some of the ways to generate money in Portugal. But most foreigners consider these top 3 types of investments in Portugal.
We should remember that Portugal was, not so long ago, a country dedicated mainly to agriculture, livestock, and fishing.
With the financial assistance of the European Union, Portugal took the opportunity to develop its structure to be one of the most important technological fields in Europe, mainly in the Lisbon area.
If you want to know more about Portugal and its opportunities, why not join our Facebook Group – All About Portugal For Expats?
It’s a community of over 14,000 enthusiasts that talks about everything from investments to housing and more! And if you need professional help, book a consultation with Viv Europe now!
